Shares in Transurban Group (ASX: TCL) are on the slide today after news the company’s partially-owned subsidiary is completing a $1.8 billion private placement. At the time of writing, the Transurban share price is down 1.26%, swapping hands at $14.12.
For comparison, the S&P/ASX 200 Index (ASX: XJO) is down by 0.94%.
Prior to the announcement at 10.37 am AEST, the Transurban share price was trading almost in line with the ASX 200’s movements today.
Transurban advised that the financing vehicle of WestConnex Group has placed $1.8 billion worth of fixed-rate senior secured notes in the US private placement market.
Let’s take a closer look at today’s news.
$1.8 billion placement
Transurban has announced that WestConnex will be completing a $1.8 billion placement to pay off a $1.2 billion balance on a debt facility.
The rest of the funds raised in the placement will be paid to WestConnex shareholders as a capital release.
As Transurban owns 25.5% of WestConnex shares, the company expects to receive around $280 million.
The notes will be issued in four tranches, each valued at between $350 million and $510 million.
They will have tenors of 10 years and 3 months, 12 years, 15 years, and 20 years, respectively.
All proceeds from the placement will be swapped into Australian dollars. The interest rate exposure will be fully hedged for the term of the notes.
What is WestConnex?
WestConnex is a toll road project in Sydney. It’s building a number of new tunnels with the final stage of construction set to finish in 2023.
Transurban first announced its intention to acquire 25.5% of WestConnex from the New South Wales Government in 2018. It is one of five companies that own a portion of WestConnex.
Transurban share price snapshot
The Transurban share price has been relatively steady on the ASX lately.
It’s currently up by around 3% year to date. It’s also up by 3.44% over the last 12 months.
The company has a market capitalisation of around $39 billion, with approximately 2.7 billion shares outstanding.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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